New Reporter
29-12-23, 17:01
Stable outlook for HDB resale market with 3-5% price growth forecast for 2024
Dec 28, 2023
HOUSING and Development Board (HDB) resale prices are expected to stay on an even keel in the coming year, with 3 to 5 per cent growth forecast for 2024.
The “moderate” price growth estimates would be on a par with the 4 to 5.5 per cent the HDB resale market is tipped to show for 2023, but much slower than the 10.4 per cent increase in 2022 and 12.7 per cent spurt in 2021. Prices are up by 3.8 per cent in the first nine months of 2023.
This year, the ramping up of new flat supply, inflation-wary buyers’ resistance to higher prices and the lingering impact from cooling measures have damped the resale market, said Wong Siew Ying, PropNex’s head of research and content.
While the HDB resale price index has yet to see a dip in overall prices, transaction volume shrank during the year. Huttons Asia estimates the total volume of resale flat transactions at 26,500 in 2023, 5 per cent lower than 27,896 units the year before.
https://i.imgur.com/jxpuFRU.png
HDB has said it will launch 23,000 new Build-To-Order (BTO) flats in 2023, and provide a total of 100,000 flats from 2021 to 2025 to meet demand.
“With the significant increase in BTO flat supply, elevated resale prices, and effects of the September 2021 cooling measures, it could be some time before the market repeats the feat of the robust sales seen in 2021, where more than 31,000 flats were resold,” said Wong.
Still, as “job prospects continue to look up, and income growth remains positive, demand for HDB resale flats should remain above the 10-year average of 22,809 units from 2013 to 2022”, said Christine Sun, OrangeTee & Tie’s senior vice-president for research and analytics.
Several policy changes came into effect during the year, said Lee Sze Teck, Huttons Asia’s senior director for data analytics.
These included the doubling in grants given to buyers of resale flats; a new HDB Flat Eligibility (HFE) letter required before purchase; penalties for non-selection of BTO flats; and a revised framework for BTO flats designed to keep a lid on public housing prices – factors which pulled the resale market in different directions.
Despite the increased competition from the BTO market, a resale price correction is not expected next year, said Sun. Supply is expected to shrink.
Estimates of resale supply are derived from the number of HDB flats coming out of their Minimum Occupation Period (MOP), a five or 10-year stretch when owners are barred from selling their units. While not all owners will put their homes on the market, the number of flats exiting their MOP counts towards flats available for resale.
Sun estimates the total number of new flats hitting their five-year MOP in 2023 at 15,748 – half of the 31,325 units in 2022. She expects the supply of MOP flats to shrink further in 2024 to 13,093 units.
“The dwindling supply of MOP flats will help prop up prices in some locations,” said Sun. “Existing stock may continue to shrink as some flat owners may delay their upgrading plans and stay put in their flats due to the high replacement cost of a new home. Buyers who need immediate housing will continue to buy resale flats, especially given the resale grants and subsidies.”
PropNex noted that the 13,093 HDB flats completing their MOP next year would be in towns such as Sembawang, Sengkang, Tampines and Toa Payoh, accounting for 61 per cent of the total units.
“However, this could be supplemented by HDB upgraders who are seeking to sell their flats upon receiving keys to their newly completed homes,” said Wong.
Research by Nicholas Mak, Mogul.sg’s chief research officer, found that the supply of “new MOP” flats coming fresh out of BTO projects would decline each year after 2023 to 8,000 flats in 2026. “This is because the development of BTO flats that were supposed to be completed in 2020 and 2021 were delayed by the Covid-19 pandemic, leading to a lower supply of newly completed BTO flats during the pandemic,” he said.
However, the supply of MOP flats coming from the secondary market – that is, from existing resale flats – has increased steadily each year since 2019, and will peak in 2026 at 31,000 flats, said Mak.
The combined supply of flats – from both the BTO and secondary markets – released into the resale market in 2024 to 2026 “will contribute to moderate the prices of HDB resale flats”, Mak concluded. But from 2026 to 2028, resale supply will start falling as total resale volume has contracted in 2022 and 2023, he said.
Even as overall resale price growth tapered off this year, the tally of million-dollar deals continued to rise. By PropNex’s estimate, the number of HDB flats transacted for at least S$1 million came to 422 units as at Nov 30, 14 per cent higher than the record 369 deals done in 2022.
Resale prices hit a new record in 2023 with the sale of an extra-large 176-square-metre adjoined flat in Bukit Merah for S$1.5 million in June. Huttons expects the year to end with 460 HDB flats sold for S$1 million or more in 2023, or 25 per cent more than last year.
The rise and rise of resale flat prices led the government to overhaul the framework for new-build public housing flats in 2023. From the second half of 2024, BTO flats will be classified into Standard, Plus and Prime flats. Tighter resale curbs – including a 10-year MOP – and a claw-back of subsidies will apply to the better-located Plus and Prime flats.
“While the new framework will not affect existing flats, it is possible some prospective buyers could be put off by the tighter restrictions for the Plus and Prime flats in choice locations (such as near town centres and MRT stations), and may decide to purchase resale flats nearby – this could then push up resale prices, depending on the lease balance and condition of the resale units,” said PropNex’s Wong.
Sun similarly expects resale demand in certain locations to rise. “The increased demand could drive more million-dollar resale transactions in some of these locations. However, some singles may be diverted from the resale market since they can now apply for new flats in all locations,” she said.
Huttons’ Lee added: “There was more interest in newer flats in mature estates which had no restrictions on resale. Buyers viewed such flats without restrictions as potentially having better capital appreciation in the future and are willing to buy them now.”
Lee sees 20,000 to 25,000 BTO flats being launched by HDB next year to stabilise prices in the resale market.
https://www.businesstimes.com.sg/property/stable-outlook-hdb-resale-market-3-5-price-growth-forecast-2024
Dec 28, 2023
HOUSING and Development Board (HDB) resale prices are expected to stay on an even keel in the coming year, with 3 to 5 per cent growth forecast for 2024.
The “moderate” price growth estimates would be on a par with the 4 to 5.5 per cent the HDB resale market is tipped to show for 2023, but much slower than the 10.4 per cent increase in 2022 and 12.7 per cent spurt in 2021. Prices are up by 3.8 per cent in the first nine months of 2023.
This year, the ramping up of new flat supply, inflation-wary buyers’ resistance to higher prices and the lingering impact from cooling measures have damped the resale market, said Wong Siew Ying, PropNex’s head of research and content.
While the HDB resale price index has yet to see a dip in overall prices, transaction volume shrank during the year. Huttons Asia estimates the total volume of resale flat transactions at 26,500 in 2023, 5 per cent lower than 27,896 units the year before.
https://i.imgur.com/jxpuFRU.png
HDB has said it will launch 23,000 new Build-To-Order (BTO) flats in 2023, and provide a total of 100,000 flats from 2021 to 2025 to meet demand.
“With the significant increase in BTO flat supply, elevated resale prices, and effects of the September 2021 cooling measures, it could be some time before the market repeats the feat of the robust sales seen in 2021, where more than 31,000 flats were resold,” said Wong.
Still, as “job prospects continue to look up, and income growth remains positive, demand for HDB resale flats should remain above the 10-year average of 22,809 units from 2013 to 2022”, said Christine Sun, OrangeTee & Tie’s senior vice-president for research and analytics.
Several policy changes came into effect during the year, said Lee Sze Teck, Huttons Asia’s senior director for data analytics.
These included the doubling in grants given to buyers of resale flats; a new HDB Flat Eligibility (HFE) letter required before purchase; penalties for non-selection of BTO flats; and a revised framework for BTO flats designed to keep a lid on public housing prices – factors which pulled the resale market in different directions.
Despite the increased competition from the BTO market, a resale price correction is not expected next year, said Sun. Supply is expected to shrink.
Estimates of resale supply are derived from the number of HDB flats coming out of their Minimum Occupation Period (MOP), a five or 10-year stretch when owners are barred from selling their units. While not all owners will put their homes on the market, the number of flats exiting their MOP counts towards flats available for resale.
Sun estimates the total number of new flats hitting their five-year MOP in 2023 at 15,748 – half of the 31,325 units in 2022. She expects the supply of MOP flats to shrink further in 2024 to 13,093 units.
“The dwindling supply of MOP flats will help prop up prices in some locations,” said Sun. “Existing stock may continue to shrink as some flat owners may delay their upgrading plans and stay put in their flats due to the high replacement cost of a new home. Buyers who need immediate housing will continue to buy resale flats, especially given the resale grants and subsidies.”
PropNex noted that the 13,093 HDB flats completing their MOP next year would be in towns such as Sembawang, Sengkang, Tampines and Toa Payoh, accounting for 61 per cent of the total units.
“However, this could be supplemented by HDB upgraders who are seeking to sell their flats upon receiving keys to their newly completed homes,” said Wong.
Research by Nicholas Mak, Mogul.sg’s chief research officer, found that the supply of “new MOP” flats coming fresh out of BTO projects would decline each year after 2023 to 8,000 flats in 2026. “This is because the development of BTO flats that were supposed to be completed in 2020 and 2021 were delayed by the Covid-19 pandemic, leading to a lower supply of newly completed BTO flats during the pandemic,” he said.
However, the supply of MOP flats coming from the secondary market – that is, from existing resale flats – has increased steadily each year since 2019, and will peak in 2026 at 31,000 flats, said Mak.
The combined supply of flats – from both the BTO and secondary markets – released into the resale market in 2024 to 2026 “will contribute to moderate the prices of HDB resale flats”, Mak concluded. But from 2026 to 2028, resale supply will start falling as total resale volume has contracted in 2022 and 2023, he said.
Even as overall resale price growth tapered off this year, the tally of million-dollar deals continued to rise. By PropNex’s estimate, the number of HDB flats transacted for at least S$1 million came to 422 units as at Nov 30, 14 per cent higher than the record 369 deals done in 2022.
Resale prices hit a new record in 2023 with the sale of an extra-large 176-square-metre adjoined flat in Bukit Merah for S$1.5 million in June. Huttons expects the year to end with 460 HDB flats sold for S$1 million or more in 2023, or 25 per cent more than last year.
The rise and rise of resale flat prices led the government to overhaul the framework for new-build public housing flats in 2023. From the second half of 2024, BTO flats will be classified into Standard, Plus and Prime flats. Tighter resale curbs – including a 10-year MOP – and a claw-back of subsidies will apply to the better-located Plus and Prime flats.
“While the new framework will not affect existing flats, it is possible some prospective buyers could be put off by the tighter restrictions for the Plus and Prime flats in choice locations (such as near town centres and MRT stations), and may decide to purchase resale flats nearby – this could then push up resale prices, depending on the lease balance and condition of the resale units,” said PropNex’s Wong.
Sun similarly expects resale demand in certain locations to rise. “The increased demand could drive more million-dollar resale transactions in some of these locations. However, some singles may be diverted from the resale market since they can now apply for new flats in all locations,” she said.
Huttons’ Lee added: “There was more interest in newer flats in mature estates which had no restrictions on resale. Buyers viewed such flats without restrictions as potentially having better capital appreciation in the future and are willing to buy them now.”
Lee sees 20,000 to 25,000 BTO flats being launched by HDB next year to stabilise prices in the resale market.
https://www.businesstimes.com.sg/property/stable-outlook-hdb-resale-market-3-5-price-growth-forecast-2024